Israel fears that the US government would suspends the annual military aid of $1.3 billion to Egypt after the Egyptian Army overthrew Morsi’s government, Israeli daily Globes reported on Thursday.

The paper quoted US sources as saying that Israel might ask the US administration to find a way to continue supplying aid to Egypt.

US President Barack Obama said on Wednesday that he was “deeply concerned” by the military removal of Morsi. Obama said he ordered the government to review the American aid to Egypt.

Under the US law, the government has to suspend foreign aid to any country whose elected leader is toppled in a coup. Obama has so far stopped short of describing the events in Egypt as a coup.

The American sources also told the Israeli paper that maintaining the peace treaty was one of the pillars of the collapsed government of Morsi.

“The US Congress, which controls the purse strings, was suspicious, and even hostile, to Egypt's Muslim Brotherhood government. Its agreement, albeit with gritted teeth, to keep the peace treaty with Israel, was one of the main reasons why the pro-Israeli Congress agreed to continue aid to Egypt after the fall of President Hosni Mubarak in 2011,” the paper also said.

The sources also said that the Tel Aviv regime hoped that the US would understand the importance of the treaty and continue its aid to Egypt.

General Abdel Fattah al-Sisi, the head of Egypt’s Army, announced late Wednesday that President Morsi was no longer in office. He declared Head of Supreme Constitutional Court Adly Mansour as the interim president.

Morsi’s ouster came after days of massive anti-government protests plunged the country into chaos.